From the Hotline: Payroll Tax Withholding for an Employee who Works and Lives in Different States

Question: What are the rules for payroll tax withholding when an employee lives and works in two different states?

Answer: It will largely depend on the particular states in question. In general, if an employee lives and works in two different states, the employer must withhold taxes for the state in which the employee works. However, the employer may also need to consider the withholding requirements of the state of residence—which could impose additional withholding requirements and responsibilities.

We recommend contacting each of the state’s unemployment tax departments for details on how to withhold properly based on the specific situation. In addition, some states have reciprocity agreements which detail where and download free mp3 songs the withholding from the employee’s paycheck should be made.

Tax withholding issues can be quite complicated. Consult with your accountant or tax attorney to make sure that the withholdings are handled appropriately.